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LONDON, Dec 2 (Reuters) - Equity funds suffered a $14.1 billion outflow in the week to Wednesday in the largest exit in three months, BofA Global Research said in a note on Friday. U.S. equity funds saw an $16.2 billion outflow, the biggest since April, the latest flow data from BofA also showed. Bond funds also saw outflows, to the tune of $2.4 billion, while cash funds attracted $31.1 billion inflows and gold funds added $59 million, BofA said citing EPFR data. In its weekly note, BofA noted that outflows from credit funds in 2022 of $316 billion have unwound all the inflows of 2021. It added that while equity funds have seen inflows this year of some $207 billion, this was down from the "euphoric inflows" seen last year.
[1/3] A girl walks past a flag of Ghana outside the Cape Coast Castle, in Ghana, July 28, 2019. "If Ghana decides to use the guarantee, it has to pay back immediately to the World Bank," Mitu Gulati, a law professor at the University of Virginia and debt restructuring expert, said. "This is a highly protected instrument that was issued with the logic that Ghana would never default on the World Bank," Gulati said. Ghana 2030 bondIN OR OUT? Ghana has not yet said whether the 2030 issue will be part of its debt restructuring.
LONDON, Dec 2 (Reuters) - Investors have withdrawn $316 billion from credit funds this year, unwinding all of the previous year's inflows, BofA Global Research said in a note on Friday. In its latest note on fund flows, BofA said equities funds had seen inflows of $207 billion in 2022, below the "euphoric inflows" of the previous year. Equity funds suffered a $14.1 billion outflow in the largest exit in three months, BofA said, citing EPFR data. Cash funds attracted $31.1 billion of inflows and gold funds added $59 million, BofA added. In emerging markets, BofA said bonds had a 15th week of outflows, losing $500 million, while equities attracted $1.1 billion of inflows.
SummarySummary Companies G10 central banks deliver 350 bps of rate hikes last monthEmerging central banks tightened policy by 400 bpsHiking cycle coming to an end in many developing economiesLONDON, Dec 2 (Reuters) - The pace and scale of rate hikes delivered by central banks in November picked up speed again as policy makers around the globe battle decade high inflation. Central banks overseeing six of the 10 most heavily traded currencies delivered 350 basis points (bps) of rate hikes between them last month. The European Central Bank, the Bank of Canada, the Swiss National Bank and the Bank of Japan did not hold rate setting meetings in November. The latest moves have brought total rate hikes in 2022 from G10 central banks to 2,400 bps. "Central banks' determination to bring down inflation suggests that policy rates need to go higher still."
Take Five: Ready for that Santa rally?
  + stars: | 2022-12-02 | by ( ) www.reuters.com   time to read: +5 min
1/FRANC DISCUSSIONCredit Suisse executives may need to sit down for an honest chat about whether the bank's latest strategic plan is enough to rally investors. And with the Federal Reserve, European Central Bank and Bank of England meeting in coming weeks, the drama isn't over. For some, the notion of peak rates, peak inflation and China's reopening is reason enough for cheer. After months of pain inflicted by high inflation and aggressive rate increases, perhaps it's time to bring on the Santa rally. That wouldn't necessarily cut short a rally in Aussie dollar, which recently has been driven more by China's re-opening hopes and a retreating greenback than the RBA.
[1/2] The logo of Swiss bank Credit Suisse is seen in Zurich, Switzerland October 26, 2022. Credit Suisse declined to comment on the market moves. Credit Suisse rights for its 2.24 billion Swiss francs ($2.4 billion) share issue were down 8%, having reversed initial gains. Credit Suisse bonds also weakened, with additional tier 1 dollar bonds down over 4 cents and many sinking below the levels seen during a sell off in the bank's shares and bonds in early October, Tradeweb data showed. Battered by a series of scandals and mounting losses, Credit Suisse last month embarked on a turnaround plan.
China is Sri Lanka's largest bilateral creditor and, with India and Japan, part of official creditor talks to restructure the country's debt. "China will have to play a major role in Sri Lanka's debt restructuring process," CARI researchers Umesh Moramudali and Thilina Panduwawala wrote in the report. The island nation's total external debt is $37.6 billion, according to the report. Adding central bank foreign currency debt, including a $1.6 billion currency swap with China, public external debt rises to $40.6 billion, of which 22% is from Chinese creditors. The loan agreements have clauses that "submit the loans to Chinese governing law and arbitration before the China International Economic and Trade Arbitration Commission".
Credit Suisse stocks drop to fresh record lows, bonds suffer
  + stars: | 2022-11-30 | by ( ) www.reuters.com   time to read: +1 min
Nov 30 (Reuters) - Credit Suisse stocks sunk to fresh record lows on Wednesday and the cost of insuring its debt soared to a new peak amid little sign that investors' concerns over the outlook for the Swiss lender were fading. Credit Suisse (CSGN.S) shares were down more than 1% in their ninth straight session in the red with the stock having lost 66% since the start of the year. Credit Suisse rights for its 2.24-billion-francs cash call were up 1% though that comes after suffering a 30% tumble on Tuesday. The cost of insuring exposure to its debt scaling a record high of 409 basis points (bps), up 2 bps from Tuesday's close, according to S&P Global Market Intelligence. Credit Suisse credit default swaps had started the year at 57 bps.
LONDON, Nov 30 (Reuters) - Asset manager BlackRock has said 2023 will require a new investment playbook, backing banks and energy sectors to do well while slapping 'underweights' on longer-term European government bonds and emerging market local currency debt. The BlackRock Investment Institute (BII) said in its 2023 global outlook that while the case for investment credit has brightened and short-term government debt yields looked attractive, the pressures of higher interest rates would weigh on longer-term sovereign bonds. "The macro damage we expect for next year is yet to be fully reflected in market pricing" said Wei Li, global chief investment strategist at the BII. Reporting by Marc Jones and Davide Barcuscia, editing by Karin StroheckerOur Standards: The Thomson Reuters Trust Principles.
Shares in Credit Suisse (CSGN.S) fell 3.1% to 2.915 francs by 1451 GMT, their lowest level on record according to Refinitiv data, as the rights tumbled as much as 29.9% to as low as 0.101 on their second day of trading in Zurich. That took losses for Credit Suisse shares in 2022 to more than 65%, further shrinking its market value to 12 billion francs and firmly setting the stock for its biggest yearly drop. "The problem now for Credit Suisse is to plug the outflows of staff and client assets: the damage is done and there will be an impact for sure," said Angelo Meda, head of equities and portfolio manager at Banor SIM in Milan. Credit Suisse declined to comment. snapshotThe offering, which is guaranteed by a group of banks, will raise as much as 2.24 billion Swiss francs ($2.3 billion) and follows a 1.76 billion-franc share placement where Saudi National Bank took a 9.9% shareholding in Credit Suisse.
"While we have been cautious, there is an important shift going on with the COVID reopening." The protests were the strongest public defiance during Xi's political career, China analysts said. If protests were to continue, this would add to the risk premium, said Sean Taylor, chief investment officer for Asia-Pacific at DWS Group. Social discontent stemming from the zero-COVID policy added to risks in executing and implementing government policies, said Mark Haefele, global wealth management CIO at UBS in Zurich. We also view China’s sluggish recovery as a risk for the global economy and markets."
Nov 28 (Reuters) - Credit Suisse bonds fell and the cost of insuring its debt against default rose on Monday as the Swiss bank struggled to win over rattled investors following an exodus of client cash and with more litigation on the horizon. The bank had also revealed in an official filing for a capital hike that the U.S. Federal Reserve had said it intended to pursue an investigation of Credit Suisse over collapsed U.S. investment firm Archegos. Credit Suisse CDS opened the year at 57 bps. The Federal Reserve announcement suggests the bank could face additional fines related to its connection to Archegos, whose collapse rocked Wall Street as its highly leveraged stock bets went sour. Credit Suisse's 4 billion franc capital raising is designed to help put the bank back back on track following the biggest crisis in its 166-year history.
Credit Suisse bonds slide, CDS rise
  + stars: | 2022-11-28 | by ( ) www.reuters.com   time to read: 1 min
Nov 28 (Reuters) - Credit Suisse bonds fell and the cost of insuring exposure to its debt rose on Monday following reports of fresh troubles at the Swiss lender. Five-year credit default swaps widened 4 basis points (bps) from Friday's close to 349 bps, the highest since at least early October, according to data from S&P Global Market Intelligence. Bonds also came under pressure, with the additional tier 1 dollar-denominated issues down as much as 1.7 cent, hitting the lowest level since mid-October. The head of Credit Suisse's Swiss unit said on Sunday that "some customers have withdrawn some of their money, but very few have actually closed their accounts." Reporting by Chiara Elisei, editing by Karin StroheckerOur Standards: The Thomson Reuters Trust Principles.
"Protests are a concern in the short-term," Seema Shah, chief strategist at $500 billion asset manager Principal Global Investors told Reuters, adding that latest events supported the view that winds were changing. "While we have been cautious, there is an important shift going on with the COVID reopening." If protests were to continue, this would add to the risk premium, said Sean Taylor, chief investment officer for Asia-Pacific at DWS Group. "We believe this divergence in view will drive an outperformance in A shares over H shares," Tang said. We also view China’s sluggish recovery as a risk for the global economy and markets."
Market watchers' comments on COVID-19 protests in China
  + stars: | 2022-11-28 | by ( ) www.reuters.com   time to read: +6 min
Here's what market watchers are saying about the unrest:ALLAN VON MEHREN, CHIEF ANALYST, DANSKE BANK, COPENHAGEN:"Normally protests in China are aimed at local governments but a crowd in Shanghai directed their protest against the Communist Party and Xi Jinping." "The protests come as the recent tweaks in the zero-Covid policy seem to have backfired as they led to rising cases across the country that subsequently triggered new restrictions being implemented. MARK HAEFELE, GLOBAL WEALTH MANAGEMENT CIO, UBS, ZURICH:"We do not expect economic or market headwinds in China to abate significantly over the coming months. KEN CHEUNG, CHIEF ASIA FX STRATEGIST, MIZUHO, HONG KONG:"The China economy is heading to the direction of reopening but the road to the reopening could be a bumpy one. GARY NG, ECONOMIST, NATIXIS, HONG KONG:"The market does not like uncertainties that are difficult to price and the China protests clearly fall into this category.
"The Egyptian pound will likely remain under pressure until more U.S. dollar inflows from GCC (Gulf nations) and committed foreign direct investment materialises," said Carla Slim at Standard Chartered Bank. Last month's IMF deal has provided some respite. ,"Egypt has got a high debt load and arguably it is more vulnerable even than Pakistan in terms of debt payments as a share of revenues," said Renaissance Capital's chief economist Charlie Robertson. "But the difference is, it has been proactive and been quick to go to the IMF," Robertson added, noting Egypt also has strong support from rich Gulf countries. Egypt's IMF negotiations dragged on for seven months and drove its second big devaluation of the year.
Emerging economies started hiking before the Fed, and quickly, partly because their currencies had weakened against the dollar, raising funding costs and importing inflation. That had quickly fed through to prices, especially energy and some food commodities that are generally traded in dollars. "Total reserves in the emerging markets had fallen by over $400 billion, down 7%, this year as of September." ECB & BOJAt the ECB, the Fed's signal bolsters an already strong case for more measured rate hikes after back-to-back 75 basis point moves and eases growth concerns. Slower Fed rate hikes also help the Bank of Japan, whose ultra-low rates have been criticised for fuelling a sharp yen decline that inflates the cost of imports.
LONDON, Nov 22 (Reuters) - The European Bank for Reconstruction and Development urged governments in its region to rethink COVID-19 support measures for companies, warning that propping up "zombie" firms could have a knock-on effect on healthy businesses. However, ongoing support was no longer sustainable in a world of high interest rates, the EBRD said. Having zombie firms present in an economy creates negative spillovers for healthy firms, which see lower investment, revenue and employment, the EBRD warned. The problem is more present in economies dominated by government-run companies and banks, the EBRD found: 13% of state-owned enterprises in the 12-country sample used for the study could be classified as zombie firms, compared with 9% of privately-owned firms. The EBRD report also showed mixed progress on reforms by countries in six key areas, from competitiveness and resilience to the way they are governed.
REUTERS/Eduardo Munoz/File PhotoLONDON, Nov 21 (Reuters) - India has emerged as the second most coveted investment market after the United States for sovereign wealth funds and public pensions funds in 2022, according to a study by asset manager Invesco published on Monday. Sovereign investors, which now manage some $33 trillion in assets, have also seen a rapid rise in allocations to private markets, though this development might start to slow with fixed income back in favour, the Invesco Global Sovereign Asset Management Study said. "Over the last 10 years sovereign investors have invested with the wind at their backs thanks to the secular bull market that emerged from the global financial crisis," said Rod Ringrow, Invesco's head of official institutions. Average annual returns for sovereign investors over the past decade stood at 6.5% and, for sovereign wealth funds alone, at 10% in 2021, Invesco found. While the United States remained the top destination, some sovereign investors were keen to rebalance portfolios, fearing they had become overly reliant on U.S. markets which left them vulnerable to the correction in equity markets seen this year, Invesco said.
Take Five: Black Friday test
  + stars: | 2022-11-18 | by ( ) www.reuters.com   time to read: +5 min
1/GOING SHOPPINGWith concerns that the U.S. economy may be on the verge of a recession, a key test of consumer demand arrives on Nov. 25, when retailers launch "Black Friday" sales - a day traditionally marked by long lines of shoppers eager to pounce on discounts. Soaring inflation and surging interest rates could test buying appetite. The dollar index, meanwhile, peaked at a 20-year high of 114.78 in September and has been falling ever since. Reuters Graphics3/BLEAK OUT THEREThe International Monetary Fund says the global economic outlook is even gloomier than it was a month ago. Preliminary readings of business activity in November from a number of economies could answer the question in the coming days.
UBS joins the emerging market bull run band
  + stars: | 2022-11-15 | by ( ) www.reuters.com   time to read: +1 min
LONDON, Nov 15 (Reuters) - Swiss bank UBS has joined a growing band of investment houses forecasting that emerging markets will see a bumper bounce next year after their torrid 2022. UBS' analysts published a note on Tuesday predicting 8-12% returns in emerging market equities in 2023 and a 2-3% rise in emerging currencies citing expectations for interest rate pressures to reduce and China easing its COVID containment restrictions in the second quarter of the year. They also project +10-15% returns in the mainly dollar-denominated emerging market hard currency debt indexes and +8-12% in big the local currency debt indexes. "As U.S. inflation further moderates and China cyclically recovers from Q2, we expect volatility to decline across EM assets," UBS said. Reporting by Marc Jones, editing by Karin StroheckerOur Standards: The Thomson Reuters Trust Principles.
JPMorgan raised its outlook for emerging market hard-currency debt on Monday to "marketweight" from "underweight", saying the latest U.S. inflation data cemented a shift to the next phase in the cycle. In its 2023 outlook Morgan Stanley predicted emerging market hard-currency bonds could return more than 14% next year. Core CPI seems to be finally in," Citi Research's head of emerging market strategy Dirk Willer said in the bank's weekly strategy note. However, it might not be quite time for investors to dive into emerging market sovereign credit. JPMorgan's emerging market strategist Jonny Goulden said Federal Reserve hiking cycles were usually followed by a "wait" period before the onset of a U.S. recession, or possibly even an emerging markets financial crisis.
LONDON, Nov 14 (Reuters) - JPMorgan raised its outlook for emerging market hard-currency debt on Monday to "marketweight" from "underweight", saying latest U.S. inflation data cemented a shift to the next phase in the cycle with focus now on growth and U.S. recession risks. However, this was not yet the entry point for investors to dive into emerging market sovereign credit they added. JPMorgan's emerging market strategist Jonny Goulden said Federal Reserve hiking cycles were usually followed by a "wait" period before the onset of a U.S. recession or possibly even an emerging markets financial crisis. "This will be the largest Fed hiking cycle for decades, with a large tightening in broad financial conditions". "But we have highlighted that the 'wait' period when the Fed has delivered its last hikes is usually accompanied by some relief" (in emerging markets)Reporting by Karin Strohecker; editing by Marc JonesOur Standards: The Thomson Reuters Trust Principles.
WASHINGTON, Nov 10 (Reuters) - Switzerland-based Glencore, China and Chad's other creditors have reached an agreement in principle on restructuring the African country's nearly $3 billion in external debt, a source close to the negotiations said on Thursday. Glencore (GLEN.L), a major private creditor, agreed late in October or early November to join the other creditors, the source said. Chad owes one third of its external debt to commercial creditors, and almost all of that to Glencore in oil-for-cash deals dating back to 2013 and 2014. The agreement now reached marks progress and reflects growing trust among creditors, including China, as they negotiate on debt issues, the source said. Chad's creditor committee is co-chaired by France and Saudi Arabia.
NEW YORK, Nov 4 (Reuters) - Turkey should tighten monetary policy and give its central bank more independence, a mission from the International Monetary Fund (IMF) said on Friday. "To address (Turkey's) challenges, the mission recommended early policy rate hikes accompanied by moves to strengthen the central bank's independence," said the IMF in a press release. "Such moves would help reduce inflation more durably and allow reserve buffers to be rebuilt over time." The IMF staff statement comes after the mission visit to Istanbul and Ankara last month. Reporting by Rodrigo Campos in New York Editing by Karin Strohecker and Matthew LewisOur Standards: The Thomson Reuters Trust Principles.
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